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The Chicago Board Options Exchange Volatility Index, or VIX, is also known as the "Fear Gauge" on Wall Street. It measures the cost of using options as insurance against a decline in the S&P 500. The VIX is basically a measure of expected volatility over the next 30 days.

According to a Bloomberg, the VIX had an average level of 16.13 dating back 5 years. Today closed below 40 for the first time since October 2. Over the past 2 months, the VIX has fallen 51% from an all-time closing high of 80.86 set back in October.

According to a VIX options market maker, the VIX above 40 is a sign of market panic. Now that the VIX has closed below 40, it's a sign that the market is starting to stabilize. As fear comes out, money may come in.

From the Bull Pen: A January rally is on the radar of many here. Instead of trying to pick individual stocks, those bullish could consider the Double S&P 500 ETF (SSO) with a stop at $23.50.

Bear Cave: Treasuries could get beat up as we head into 2009. One way to play could be the UltraShort Lehman 20 Treasury (TBT). Consider buying it here and set a stop loss below $35.

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